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(Adds further details, company comment)

* Q2 net profit 31 bln rupees vs 32.2 bln rupees forecast

* Higher sales, better prices boost results

By Prashant Mehra

MUMBAI, Nov 9 (Reuters) - Coal India, the world's
largest coal producer, posted a 19 percent rise in
second-quarter profits on Friday and said it expects to step up
production this year after years of sluggish output.

The state-controlled miner, which produces about 80 percent
of India's coal, is under pressure to ease energy shortages at
home but has struggled for years to raise output due to problems
in obtaining environmental and regulatory approval. Output
levels have remained nearly flat for the past two years and it
missed its production target last year.

The company is aiming to supply 464 million tonnes of coal
this fiscal year ending next March, an increase of about 7
percent, and said on Friday production in the fiscal second
quarter which ended in September was up 11 percent at 89.1
million tonnes, after taking additional steps to maintain output
despite heavy monsoon rains.

Coal India said its net profit in the three months to
end-September rose to 30.8 billion rupees ($565 million), short
of the average forecast of 32.2 billion rupees given in a
Reuters poll of analysts.

Net sales rose 11 percent to 146 billion rupees, which
compared with an average forecast of 149 billion.

Coal India, the country's fifth-largest company by market
value, has been a favourite with investors, despite
underperforming the main stock index this year.
Twenty-nine of the 40 analysts covering Coal India rate the
stock a 'buy' or 'strong buy', according to Thomson Reuters
Starmine data.

PRICES

Coal India has been able to charge higher prices to some
customers after changing its pricing system this year, even
though international coal prices have fallen by nearly 30
percent.

The company still prices domestic coal at 45 to 70 percent
below international prices, in part to keep costs low for power
producers, its main customers but India's business tycoons have
been pressing the government to help with supplying the
generators with more coal, to help solve the country's power
shortages.

Earlier this year the miner agreed to supply a minimum of 80
percent of the coal needed for 48 new power projects, but has
indicated it may need to import some of the fuel.

Shares in Coal India, valued at nearly $40.7 billion, closed
0.7 percent lower ahead of the results. The stock has risen
nearly 16 percent so far this year, compared with a 22 percent
rise in the main stock index.
($1=54.50 rupees)
(Additional reporting by Sujoy Dhar in Kolkata; Editing by Greg
Mahlich)

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